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Pat Quinn, Governor
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Chartering a Credit Union
 

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A state-chartered credit union is a nonprofit, member-owned cooperative financial institution incorporated to encourage thrift among its members, create a source of credit at a reasonable rate and provide an opportunity for members to improve their economic and social conditions. The Department encourages the formation of new Illinois state-chartered credit unions and is an active participant in the chartering process. The initial step in organizing a credit union is completion of an application to the Credit Union Section. The Department and credit union organizers then discuss compliance with common bond requirements, the economic viability of the proposed credit unions, and the development of a projected budget for first year operations. Following a favorable investigation of these areas, the proposed new credit union will draft a statement of incorporation, adopt standard bylaws, and provide the Department with a commitment letter providing share insurance from either the National Credit Union Administration or American Share Insurance, Inc. The Director of the Department holds approval authority for the granting of new charters.

 

Steps to Chartering Your Own Financial Institutions Credit Union
 
Read the Facts

A credit union is a group of people who share a common bond such as working together, living in the same neighborhood, belonging to the same church, union, or similar organization, who....

  • desire to own and operate their own financial institution.
  • agree to pool their savings and use the deposits to make loans to fellow members and buy government securities or other approved investments.
  • share mutually in the net income, via dividends, after deducting operating expenses and required reserves.
A Board of Directors is elected annually by the credit union members. Share balances are fully insured. Operating policies and procedures are determined by the Board of Directors but implemented by credit union employees and can include almost any kind of consumer financial services.

An Illinois state-chartered credit union is regulated by the Division of Financial Institutions in accordance with the Illinois Credit Union Act. DFI examines and supervises all chartered Illinois credit unions to assure the safety and soundness of the financial institutions.

 
Is a Credit Union Right for You?
  • Credit unions are owned by their members. They are created to meet the members’ financial needs.

    Over 2 millions Illinois citizens belong to credit unions.

  • Credit unions create a source of credit at reasonable rates and provide an opportunity for members to improve their economic and social conditions.

    Since inception of the credit union regulation in 1925, over 1,000 credit union charters have been granted in Illinois.

  • Credit unions help members save. Most sponsoring organizations provide payroll deductions where deposits and loan payments are made automatically during each payroll period, at the member’s request.

    Over 80% of credit union savings are in occupational (common employer) credit unions.

  • Credit unions are nonprofit corporations. Earnings after expenses are returned to the members as dividends. Regulations do not limit the dividend rates paid to members.
  • Credit unions provide loans at low rates.

    The average yield on credit union loans are generally lower than other financial institutions.

Take Action
  • Inform DFI of your interest.
  • Meet with individuals from your group and sponsoring organization to determine if a credit union will meet your needs.
  • Obtain chartering forms and other legal documents required to make an application.
  • Identify and contact other organizations for advice and assistance, including trade associations and nearby credit unions.
  • Hold an organizational meeting to review the operating policies and projected budgets to ensure that the proposed credit union is economically viable.
  • Upon satisfactory completion of state requirements, the Director will issue a charter authorizing your group to operate its own financial institution.
What You'll Need for Your Credit Union
  • A completed Articles of Incorporation and Application Form.
  • A detailed business plan.
  • Proposed lending, collection and investment policies.
  • Resumes of all proposed Board of Director members.
  • Evidence of a commitment for share insurance.

The organization of a state-chartered credit union requires extensive planning and the intention to devote the necessary time and effort to make the credit union a safe and sound financial institution.

To learn more, telephone or write:

Division of Financial Institutions
Credit Union Section
320 W. Washington, Suite 550
Springfield, IL 62786

 
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